McColl v Dionisatos

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1113/00 -McCOLL v DIONISATOS JUDGMENT 1 HIS HONOUR: The plaintiff and the defendants own properties at Marrickville which are joined at the rear. The plaintiff commenced these proceedings on 19 January 2000 by issuing a summons for an urgent order that the defendants demolish a wall as soon as reasonably practicable. An amended summons was filed on 18 February 2000. Urgent relief was dealt with by Bryson J about that time. The offending wall was at least partially demolished on 27 January 2000. 2 The initial relief having been given, the matter in due course was called up for trial on a final hearing and was fixed for hearing before Knight AJ on 8, 9 and 10 October 2001. It would appear from the file that his Honour was told that the parties had entered into discussions and on 16 October 2001 his Honour made the following orders: "Pursuant to Part 72 rule 2(1) refer to Philip J Martin … for inquiry and report the questions in the Schedule hereto."

There were various ancillary orders, costs were reserved and the matter was stood over for further mention. 3 Nine questions were set out in the schedule to the order. It would seem that the questions were subsequently slightly revised. However on 3 December 2001 the referee answered the questions as follows:

Question 1 Was the design, construction and maintenance of the retaining wall (including any fill retained by that retaining wall), the slab, the stairs and the associated structures built on the Defendant's property (the "Built Structures") adequate to ensure that they did not pose any risk of damage to the rear wall of the Plaintiff's property (the "Rear Wall")?

Answer No, the design and construction of the Built Structures, in particular the retaining wall, was not adequate to ensure that they did not pose any risk of damage to the Rear Wall.

Question 2 Did the construction of the Built Structures materially contribute to the damage suffered by the Rear Wall?

Question 3 Did any rotation of the Built Structures towards the Plaintiff's property and/or any contact between the Built Structures and the Rear Wall materially contribute to the damage suffered by the Rear Wall?

Question 4 Was the design, construction and maintenance of the roof drainage system in the Plaintiff's property adequate?

Answer The maintenance of the roof drainage system in the Plaintiff's property was not adequate.

Question 5A Did water overflow from the roof gutters of the Plaintiff's property, infiltrate the foundation material surrounding the rear footings of the Carrington Rd property, cause movement of those footings and, thereby, cause the damage to the Rear Wall?

Answer The roof gutters of the Paintiff's property did overflow but did not cause movement of the rear footings of the Carrington Road property nor damage to the Rear Wall.

Question 5B Did water overflow from the roof gutters of the Plaintiff's property, infiltrate the foundation material surrounding the footings of the Built Structures cause movement or other distortion of those footings and as a result, lead to the damage suffered by the Rear Wall?

Answer Yes, water did overflow from the roof gutters and infiltrate the foundation material of the Built Structures however this water did not cause movement or other distortion to the footings of the Built Structure nor lead to the damage suffered by the Rear Wall.

Question 6 Was the design, construction and maintenance of the sewerage system in the Plaintiff's property adequate?

Answer The design and construction of the sewerage system is not adequate.

Question 7A Did water overflow from the sewer into the dish drain identified in paragraph B1.1 in the report of Mr Burn dated 12 February 2000, infiltrate the foundation material surrounding the rear footing of the Carrington Rd property , cause movement of those footings and thereby cause damage to the Rear Wall?

Answer Water did overflow into the dish drain but did not infiltrate the foundation material or cause movement of those footings or damage to the Rear Wall.

Question 7B Did water overflow from the sewer into the dish drain identified in paragraph B1.1 in the report of Mr Burn dated 12 February 2000, infiltrate the foundation material surrounding the footings of the Built Structures , cause movement or other distortion of those footings and, as a result, lead to the damage suffered by the Rear Wall?

Answer No, except that water did overflow into the dish drain.

Question 8 At the time the Rear Wall was built, was it structurally adequate to retain fill to the natural ground level?

Question 9 Was adequate provision made for drainage behind the rear wall of the Plaintiff's property (pursuant to Ordinance 71) and, if not, did this situation cause damage to the Plaintiff's property and, if so, in what manner?

Answer No, the provision for drainage behind the Rear Wall was not adequate. The build up of water, in conjunction with the soil behind the wall, caused damage to the Plaintiff's property by causing the Rear Wall to bulge and crack. 4 The learned referee gave short reasons for each of his answers. I will refer to some of these in due course. He then stated the following conclusion: "It is my recommendation that the Court find that the damage to the Rear Wall was caused by the construction of that wall being inadequate. The Rear Wall was unable to support the retained height of ground to the natural ground level. The natural ground level is indicated by the damp course built into the outer brick skin of the Rear Wall. Also the drainage behind the Rear Wall was inadequate. The movement of the Built Structures was due to the Built Structures being constructed on inadequate founding material. This movement did not cause the damage to the Rear Wall. Water overflowing from the gutters and sewer in the plaintiff's property did not cause damage to the Built Structures or the Rear Wall." 5 The matter came on before me on 8 March 2002 to complete the hearing. 6 Both parties submitted that the referee's report should be adopted save that the plaintiff submitted that the referee had not applied the proper test in his answers to questions 2 and 3, so that whilst his reasonings should be accepted, his answers should not be. 7 The point involved was that, according to the plaintiff, the referee had considered his answers on the basis that if there were two or more causes for damage, then it was necessary to find the primary or proximate cause. The plaintiff submitted he should have considered that if a material contributing cause was any act of the defendants, then the defendants would be liable for the damage subject, of course, to any deduction for contributory negligence or any rights of contribution against another tortfeasor. 8 When the matter came before me, Mr Ogborne of counsel appeared for the plaintiff, and Mr C Stewart of counsel for the defendants. 9 It seemed to me during the plaintiff's argument, that there was a fairly strongly arguable case made out that the referee had made an error of law in his approach to questions 2 and 3. I suggested that it may be appropriate to send the matter back to the referee with some further advice. 10 Mr Ogborne then said that whether the referee got the right or wrong test for questions 2 and 3 may not in the long run matter because the referee's answer to question 9 may well conclude the case. 11 At that stage, by consent, I postponed my answer to the question as to whether the referee had applied the wrong test and what should be the consequences and passed to the next question. 12 Mr Ogborne posed the next question as being: "Did the failure to have proper drainage on the defendants' land constitute a nuisance by the build up of water and exertion of pressure which caused the plaintiff's wall to collapse? Alternatively was there a negligent failure by the defendants about these matters?" 13 Mr Stewart indicated that he was not quite ready to meet that sort of case. 14 In view of the fact that the matter had been in the list for final hearing in October and had then been deflected, and because the plaintiff was only claiming about $93,000, it seemed to me appropriate to try and deal with as much of the case as could be dealt with without undue prejudice to either side. 15 I then requested Mr Ogborne to present the evidence to the Court on which he wished to rely. He complied with that request. This took the time to about 11.15 am. Mr Stewart requested some time to consider the matter generally and the evidence, and by consent, the case was stood down until 2 pm. 16 At 2 pm Mr Stewart indicated he was prepared to proceed, at least up to a point. He then read the evidence on which the defendants relied. 17 Mr Ogborne then presented his evidentiary material on quantum and made his closing address. Mr Stewart commenced his address and then requested that he be permitted to finalise his address in writing. There was no objection to this and I fixed times for Mr Stewart to present his address in writing and for Mr Ogborne to reply. 18 It was agreed before me that I should approach any finding of fact I needed to make by accepting the findings and reasons of the referee, but that I could use the further evidence which was read before me to enable me to supplement, though not impugn or contradict, the findings of the referee. 19 Mr Ogborne said that this was a clear case of nuisance. There was a little debate as to whether the damage was direct or indirect (see the problems discussed in Asman v Maclurcan (1985) 3 BPR 9592 and Owners SP 13218 v Woollahra MC [2002] NSWCA 92). However, Mr Ogborne submitted these problems do not arise in the present case because the referee's findings show that the damage was caused through the direct pressure of the water and soil against the plaintiff's wall. This is probably correct. 20 The water involved must have been surface water. This means one must go to the rules enunciated by Windeyer J in the High Court in Gartner v Kidman (1962) 108 CLR 12, 48 which were applied by the Court of Appeal in Corbett v Pallas (1995) Australian Torts Reports 81-329, 62, 241. 21 There was discussion before me as from whence the water would have come that would, together with the pressure of soil, affect the plaintiff's wall. 22 Mr Stewart took comfort in the evidentiary material which suggested that the plaintiff's wall was badly constructed, that when it was constructed it should have had a drain to the rear of it to prevent it being affected by water. Thus, water would flow over the plaintiff's roof and wall on to the ground and then build up against the plaintiff's wall; it was this factor which destroyed it. 23 However, the referee found that rainwater falling directly downwards between the gap in the plaintiff's wall and the defendants' wall did not cause the problem. 24 There was no problem before the defendants' wall was erected, and as the plaintiff's wall was built right on the boundary between the plaintiff's land and the defendants' land, any drain that would have had to be constructed would have been on the defendants' land. Moreover, because of the position of the plaintiff's wall, any water that came against the plaintiff's wall must have come from the defendants' land. 25 Both parties tried to take comfort from the answer to question 9 and the reasons therefor. Essentially these reasons were that the lack of drainage allowed water to build up behind the plaintiff's wall increasing pressure on the wall and the pressure from the soil and water caused the rear wall, that is, the plaintiff's wall, to bulge inward and crack. 26 The evidence suggests that the plaintiff's wall was not securely constructed. Moreover, that spoil from the plaintiff's excavation to build the wall was merely placed on the back of the defendants' land. When the defendants built their wall some 15 years later, it appears that they made no proper inspection of the soil on which they were to build their wall, did not realise that there had been no compaction of the fill put on the land and merely built their wall on top. The natural ground level and the base of the defendants' wall is higher than the base of the plaintiff's wall. 27 Mr Stewart kept saying that the problem really was the construction of the plaintiff's wall, particularly the lack of drainage. I put to him that really he was arguing contrary to the so-called "egg-shell" skull cases. This description derives from Owens v Liverpool Corporation [1939] 1 KB 394, 400-401, where MacKinnon LJ said: " … one who is guilty of negligence to another must put up with idiosyncracies of his victim that increase the likelihood or extent of damage to him: it is no answer to a claim for a fractured skull that its owner had an unusually fragile one."

The principle is as Edmund Davies J said in Love v Port of London Authority [1959] 2 Lloyds Reports 541, 545: " … one has to remember … that the defendants must take the plaintiff as they find him … ." 28 The principle to which I have just referred is applicable to cases of injury either to persons or to property. Although there is no actual decision which applies the egg-shell skull rule to damage to property, the leading text writers who have considered the matter all agree that the principle so applies. 29 In Clerk and Lindsell on Torts 18th ed (Sweet & Maxwell, London, 2000) [7-148] the learned author says: "Where the unexpected magnitude of the damage is caused by the unexpected sensitivity of the property damaged, it is submitted that here too the defendant should be liable for the full extent. To distinguish between personal and property damage in respect of hypersensitivity would be unacceptable." 30 The learned editor gives three reasons for this view. First, there is no hint of any such distinction in Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co (The Wagon Mound) (No 1) [1961] AC 388. Secondly, there is no justification in principle for any such distinction. Thirdly, any different rule would create immense practical difficulty. 31 Street on Torts 9th ed (Butterworths, London, 1993) at p 258 and McGregor on Damages 16th ed (Sweet & Maxwell, London, 1997) para [259] at p 166 express the same conclusion. 32 The nearest one can get to this point in the cases is a Sales of Goods Act case, Vacwell Engineering Co Ltd v BDH Chemicals Ltd [1971] 1 QB 88 and 111. In that case the defendants manufactured and supplied a chemical which was liable to explode on contact with water. In the particular circumstances a very large explosion occurred and the defendants were held liable for the full extent of the damage. The extent of the explosion was unforeseen, but the defendants were liable for the whole damage.

33 Mr Stewart (understandably enough) did not quote any authority to the contrary. I consider that Clerk and Lindsell correctly states the law in this regard. 34 Mr Stewart's submissions essentially were to endeavour to revisit the evidence before the referee to provide a factual matrix for the referee's findings and to rely on the decisions of Hodgson CJ in Eq in Comserv (No 1877) Pty Ltd v Wollongong City Council [2001] NSWSC 302 and Austin J in Micallef v Galea [2001] NSWSC 984. 35 With respect, I do not see anything that was decided in the two cases to which I have just referred as providing any assistance in the instant case. 36 Further, the conclusion of the referee is clear so that there is no need to go behind it. He found that the plaintiff's wall was poorly constructed. However, the cause of its failure was the water and soil putting pressure upon it from the defendants' side of the wall. 37 In these circumstances, Mr Ogborne submits that under the Gartner v Kidman principle the defendants were liable for the water which collected on the defendants' property and which water, together with the soil that was against the plaintiff's wall from the defendants' property forced the wall to a stage where it needed to be demolished. 38 This is, in my view correct. The fact that, had the plaintiff's wall not been inadequately constructed, it would only suffer minor damage, is, in view of the egg-shell skull rule, no answer to the claim for the loss of the whole wall. 39 Thus, the plaintiff, on the referee's findings, is entitled to damages which I will assess later in these reasons. 40 I believe that I can now return to questions 2 and 3 and briefly discuss them. In view of what I have said above, there is no purpose in sending the case back to the referee. 41 I have set out questions 2 and 3 above together with the answers given by the referee. There is no need to repeat them save that it will be remembered that the referee was asked to determine whether certain factors "materially contributed" to the damage suffered by the plaintiff. 42 I believe that the words "materially contribute" in the questions may have been unfortunate. In Chappel v Hart (1998) 195 CLR 232, 244, McHugh J summed up the law by saying: "Before the defendant will be held responsible for the plaintiff's injury, the plaintiff must prove that the defendant's conduct materially contributed to the plaintiff suffering that injury." 43 That approach appears to have stemmed initially from the words of Lord Reid in Bonnington Castings Ltd v Wardlaw [1956] AC 613, 620. However, it is a refinement that is usually employed in cases where the injury or damage to the plaintiff is brought about by a long process such as in a dust disease case, or alternatively, in medical negligence actions. Outside that sort of case it is unnecessary to refer to "materially contribute" because "The general principle is that in the case of contributory causes each wrongdoer is responsible for the whole damage": Hart and Honore Causation in the Law 2nd ed (Oxford University Press, 1985) at p 205. 44 However, even if one does apply the "materially contribute" test, one must always be aware of what Walsh J said in Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410, 417: "The general principle is clear, that the plaintiff must prove, on the balance of probabilities, that the breach of duty caused or materially contributed to his injury … ." His Honour then quoted Wigley v British Vinegars Ltd [1964] AC 307, 325: "It is for the plaintiff to prove on a balance of probabilities both that the safety measures would have been effective and that the injured person would have made use of them had they been available." 45 It is important also to remember that Taylor J said in Australian Iron & Steel Ltd v Connell (1959) 102 CLR 522, 531, that it is insufficient to find that a particular matter may have been a factor in causing the damage, the vital question is whether it is probable this was a factor in causing the damage. 46 In March v E & M H Stramare Pty Ltd (1991) 171 CLR 506, 514, Mason CJ said: " … the law's recognition that concurrent or successive tortious acts may each amount to a cause of the injuries sustained by a plaintiff is reflected in the proposition that it is for the plaintiff to establish that his or her injuries are 'caused or materially contributed to' by the defendant's wrongful conduct … . Generally speaking, that causal connexion is established if it appears that the plaintiff would not have sustained his or her injuries had the defendant not been negligent …". 47 It seems to me, with respect, that the learned referee did not fully appreciate these matters when, having given the reasons that I have set out above, he found that he should answer questions 2 and 3 "No" in each case. However, as I have indicated, this has no consequences. 48 I now turn to the question of damages. The plaintiff seeks $93,172.35 made up of three components, viz: (i) Cost of repair of wall $25,104.83 (ii) Loss of rental $60,325.02 (iii) Interest on lost rental $ 7,742.50 49 The rental is said to be lost from 16 September 1999 until 1 April 2001, a period of approximately 18 months. 50 There was affidavit evidence from the director of the company that was tenant of the plaintiff's building in September 1999, that the tenant abandoned the premises on 16 September 1999 because of the bulging rear wall and advice from an engineer that work must not be performed within three metres of the wall in case it collapsed and because of continual wetness of the floor. 51 As I have said, the offending wall was at least partially demolished on 27 January 2000. There is no evidence as to why the premises were not restored well before the hearing and relet. I suspect that the reason was that neither party had the wherewithal to rebuild, but if that were so, it is an irrelevant matter at law. 52 Indeed neither party filed any substantial evidence on the quantum of damages at all. Thus, I need do the best I can with the paucity of evidence available. In view of the relatively small amount involved, it would be criminal to prolong the hearing by remitting the issue of damages to a Master. 53 The plaintiff had a duty to mitigate her damage. This meant that in an ideal world, she ought to have repaired the wall at her own expense and relet the premises as soon as practicable. She could then claim the cost of rebuilding and the loss of rental for the interim from the defendants. The good reason that she might reasonably have suspected that the defendants could not afford to reimburse her is not a legal reason for not so acting. 54 Doing the best I can, I would assess that six months from the date of demolition was a reasonable time to restore the wall. Giving a further two months for advertising and for an agent to obtain a new tenant, it would seem to me that the plaintiff should be allowed loss of rent until 1 October 2000. 55 On the plaintiff's figures, to which there has never been objection, this means that the plaintiff is entitled to $40,375.02 under this head. The interest to be added is $6,901.25. 56 Thus there must be a verdict for the plaintiff for $72,381.10. 57 As the defendants have been wholly unsuccessful, I would consider that they should pay the whole of the costs of the proceedings. However, in case the defendants' counsel wishes to be heard on this issue, or in case there was some payment into court, I will direct that this judgment not be entered for seven days within which period, should my Associate be notified, I will extend that stay until I have heard those submissions. 58 The orders of the Court thus are:

(a) The Court adopts the referee's report except with respect to Questions 2 and 3. (b) The Court finds a verdict for the plaintiff for $72,381.10

(c) The Court orders the defendants to pay the plaintiff's costs of these proceedings including the costs of the reference.

(e) These orders are not to be entered for seven days after the date hereof or for such longer period as the Court may order.

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